Your MSP company will develop in a way that has a sort of pattern. When you are in the initial phases, you’re going to find yourself treading water and doing anything possible to make ends meet so that you can reach your “cruising altitude”, as it were. But even when you are “cruising”, you can’t be complacent. You’ve got to take stock of where you are, where you could be, and where there may be negative redundancies in operations. Certainly, there are positive redundancies, like multiple backup solutions. But sometimes, you’re paying more than you have to for certain services, and you can’t figure this out except by going over everything with a fine-toothed comb.
Total Cost of Ownership
One of your most important habits will be this constant sequence of self-improvement. One place that many MSPs end up spending more than they strictly have to is in terms of partnerships. Sometimes, looking at a potential partnership or application of service can reveal two projections of outcome. If you look at it from one angle, you can see some value; but if you consider it from a further perspective, suddenly that value disappears. Take TCO, for example. The Total Cost of Ownership of a product or service is a long-term consideration of cost. Vehicle ownership provides a great object example. If you buy a car for $5k, you’re likely going to spend $3k a year on it through maintenance, taxes, tickets, etc. So for 10 years, your TCO might be projected as $35k.
To own the vehicle, you have to make enough to pay for its upkeep over time. Notice, gasoline isn’t even included in this figure. If you fill up your tank an average of twice a month at $50 per fill up, that’s an additional $1,200 a year, which brings the final total to $47,000.
Still, you save money through transit time, convenience, and your ability to travel. The vehicle opens up more opportunities than it closes, so it pays for itself in the right scenario. Now think of a server array, as opposed to cloud computing. It’s a very similar type of thing, isn’t it?
The MSP Takeaway
As an MSP company, you’re going to have opportunities to partner with certain vendors, providers, and peers. Sometimes, the services they provide you may seem cost-effective enough at the outset but turn out to have a TCO which is higher than your Return on Investment (ROI). A good habit to develop is looking at new operational changes with a TCO focus in conjunction with the ratio of return your ROI paradigm demands.
There are times when it’s better to complete a task internally and times when it’s better to just not provide certain products or services to your clientele. This will take some level of discretion, but the more you focus your operations to have such a close focus on optimization, the more streamlined they will become.
Your MSP company must contend with competition, continuing innovations demanding new product or services provision, unexpected disasters, and shifting economies. You’re a ship at sea, so batten down the hatches and be prepared for storms–they will come. But if you’re prepared, you’ll survive.